Question

The Work in Process inventory account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period. The job cost sheets of the only two uncompleted jobs show charges of $500, & $300 for materials, & charges of $400 & $600 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:A) 83%.B) 120%.C) 40%.D) 300%

Answer 1

Answer:

Overhead rate= 1.2

Explanation:

Giving the following information:

The Work in Process inventory account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period.

Direct material= $500, & $300

Direct labor= $400 & $600

Manufacturing overhead =?

Work in process= direct material + direct labor + manufacturing overhead

3000= 800 + 1000 + MOH

3000-800-1000= MOH

1200= MOH

Overhead rate= moh/direct labor

Overhead rate= 1200/1000= 1.2